Finance

Pope Francis’ papacy is notable for its dedication to reforming the Catholic Church’s financial practices. His efforts provide valuable insights into the interplay of faith, finance, and social responsibility. By examining real-life examples and scriptural references, we can uncover important lessons from Pope Francis’ financial reform initiatives.

1. Emphasizing Transparency:

Transparency involves openness, communication, and accountability, ensuring that actions and decisions are clear and accessible to all. Pope Francis echoes this sentiment, saying, “A lack of transparency results in distrust and a deep sense of insecurity.”  He has consistently advocated for transparency within the Church as a cornerstone of integrity and trust. An inspiring example of this principle in action is Father Thomas, a parish priest in rural India. Facing dwindling donations and growing suspicion about the use of church funds, Father Thomas introduced regular financial reports during Sunday services, detailing income and expenditure. This simple act not only restored trust but also encouraged greater generosity among the congregation, illustrating how transparency can foster accountability and strengthen community bonds.

Pushpa Joseph

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Treasurers hold a key position within a registered society. We all know that without the required financial resources we cannot do anything. It is one thing to have funds, but it is totally different to see how the funds are utilized. Success depends on the latter, not the former. It is the Treasurers who can make such a success happen. Therefore, the importance of their office.  They oversee all the aspects of financial management within the society and work closely with the society’s other officials not only for the proper utilization of the funds, but also to sustain the society’s finances. Thus, it is a blessing to have good and reliable Treasurers. Understanding and learning about the different roles and responsibilities of the treasurers and the key skills required for the successful running of the finance department can help us to be better Treasurers for the successful operation of our own societies.  Here we look at the Treasurer’s office from this point of view.

What do treasurers do?

Treasurers are finance experts who manage and fulfil all the financial goals of their registered societies. Their primary responsibility is to manage the funds, including payments, cash and liquidity, in order to ensure the good financial health of the society. They collaborate with the heads of various units to set and fulfil the budgetary objectives as decided by the Governing Body. They are responsible for building and maintaining cordial relationships with the bankers and business people with whom the society has business dealings. Besides these, they also manage the additional tasks such as:

• Managing the society’s internal finance department and supervising the daily operations of the finance staff.

Fr Alex G SJ

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As we approach the new financial year, it is common to feel overwhelmed by numerous tasks and lack clarity on what needs to be done. Here, I outline key areas for planning, noting that they may vary depending on specific cases:

1. Getting the accounts ready for the new financial year: As a first step, we need to get the accounts software ready for the new financial year by changing the accounting period or splitting the company or creating a new company and importing the required data, as the case may be. This is also the time to add new ledgers or to regroup the existing ledgers according to our specific needs, based on our experience during the year.
2. Identifying the various financial goals for the new financial year: Alongside preparing accounts, we must also define financial goals for the upcoming year, which may include projects, asset acquisition, or renovations. Ideally, these goals should be determined in the current year and reflected in the budget for the next year.

3. Budget: One of the first requirements for the new financial year is preparing a budget and getting it approved by the competent authority, the Governing Body for civil needs and the Provincial/Bishop for the canonical needs, before the start of the new financial year. It serves as a road-map for proper income utilization, incorporating factors like specific goals, receivables, payables, savings, investments, and asset needs. Salary costs, including raises and increase in the number of employees, must also be considered.

Fr Alex G SJ

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Human commitment to environmental protection and sustainable development has become paramount worldwide.  Our interconnection with the universe emphasizes that the identity of humanity is inseparable from the broader natural world. Climate change and global warming underscore the urgent imperative to prioritize the sustainability of the universe for the continuation of humanity.

Care of the Universe: a Universal Priority and Responsibility

Consequently, sustainability and social responsibility are now central topics in discussions among governments, companies, and organizations globally. The societal role of organizations and the interconnection of economic, social, and environmental systems are increasingly recognized by society as a whole. Thus, the discourse revolves around the social and environmental responsibilities of all inhabitants of our universe.

Social and Environmental Responsibility entails the dedication of an organization towards contributing to sustainable economic development for the betterment of its own operations, local communities, and society at large. It emphasizes the incorporation of social and environmental considerations into the strategies, policies, practices, and procedures of all our endeavours.

Corporate Social Responsibility (CSR)

Let’s look at it from the CSR point of view. CSR can be divided into four categories: environmental, philanthropic, ethical and economic responsibility.

1. Environmental Responsibility

Environmental responsibility is the cornerstone of corporate social responsibility, centered on preserving the natural environment. It advocates for organizations to adopt environmentally friendly practices, aiming to improve natural resources through their operations and support for relevant causes. This commitment is a prevalent aspect of CSR, sometimes referred to as “environmental stewardship.”

Fr Alex G SJ

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Education remains one of the most important ministries of the Church in India.  However, there is a lack of clarity regarding the line of authority and role and responsibilities of the different officials responsible for the running of the institution, be it school or college. Here I attempt to clarify these. However, I attempt to present a role clarity from a Jesuit point-of-view. Readers may adapt it according to their specific situation and practices.

The Governing Body of the registered society, under whose authority the school functions, is the top-most legal body responsible for the policies, decision-making and running of the institution. Thus, as the ex-officio President of the Governing Body, the Provincial/Bishop remains the head. The President exercises his/her authority in line with the Memorandum and Bye-laws of the registered society. However, he/she exercises this authority through the local Superior, who in some cases, may be the ex-officio Vice-President of the registered society, where that’s the only institution run by the society.

Fr Alex G SJ

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Dear Readers, till last year we were reaching out to the financially poor schools of other societies by giving donations to the mother society. In the light of the Government restriction on inter-society donations, here I am presenting a way to deal with the situation.  Without transferring the property, we transfer only the operation and control of the school under an agreement.  Here the need for the financial support of the school is genuine and we are within the provisions of the Income Tax Act. Hence, it may be wise to execute such an agreement and a handover resolution of the giver, and a takeover resolution of the receiver of the school. The same could be followed for any unit, other than the school.

 This AGREEMENT is made on …(date)… between:

(1) The First Party, … (name)…whose address is …(address)… and (2) The Second Party, …(name)…, whose address is …(address).

WHEREAS, the First Party is the absolute and sole owner of …………..,  both the property and the school with the hostels therein, referred to as the School hereinafter, located at ………………

It is agreed as follows:

1. Aim

1.1 This is a Transfer of Operation and Control Agreement.

1.2 The Governing Body of the First Party enters into this Agreement in order to enable better running of ……….. School and the boys’ and girls’ hostels therein, hereinafter referred to as “The School” with better facilities.

1.3 This Agreement sets out the arrangements and primary terms and conditions whereby the Governing Body of THE FIRST PARTY transfers the operation and control of the School to the Governing Body of THE SECOND PARTY:

Fr Alex G SJ

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As we all know, we are in an era of ever-increasing finance related statutory compliance. As days go by, the volume of compliance keeps increasing so much that quite many of us are at a loss. As a help for those who may need, here I have tried to list them, some old provisions but many new changes, so that we are familiar with the list and learn to comply.

Income Tax-related Compliance

1. As per section 12AB, once every 5 years charitable and religious trusts registered u/s 12A have to get their 12A, henceforth 12AB, renewed.
2. Trusts registered under 12A (12AB) get tax exemption on all their income, if 85% of the annual income is spent [except corpus donation (section 11(1)(d)] in India on their objectives spelt out in their Memorandum of Association [section 11(1)].
3. As per section 139(4A), if income of the trust is beyond the basic exempt income, which is Rs 2.5 lakhs for now, the accounts have to be audited and Income Tax Return has to be filed.
4. As per section 139(1), IT exemption is denied ipso facto if form 10 is not filed before the due date u/s 139(1).
5. No modification of the objects of the trust without permission from Commissioner of Income Tax.
6. Corpus donation made to another trust cannot be claimed as an application (cannot be part of the 85% application). However, a trust can make a corpus donation to another trust from its 15% savings of the current year’s income.

Fr Alex G SJ

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The recent Notification No. 7/2023, issued on 21st February 2023, by the Central Board of Direct Taxes (CBDT) mandates the use of new audit reports, namely Form 10B and Form 10BB, for charitable and religious trusts. It is essential to determine which of these forms applies to our organization. Previously, Rule 16CC required Form 10BB for organizations under section 10(23C) and Rule 17B required Form 10B for those under section 12AB. This has now been completely changed. Understanding this change is crucial for complying with the updated regulations and managing our income accordingly.

Common Form depending on certain criteria

Rule 16CC and Rule 17B of the Income-Tax Rules, 1962 have been substituted with effect from 1^st April 2023 through the Income-tax (3^rd Amendment) Rules, 2023.  As per the amended Rules, common forms have been prescribed for organizations registered under section 12AB and those registered under section 10(23C) subject to fulfillment of certain criteria.

Fr Alex G SJ

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The Principal/Headmistress/Headmaster serves as the top authority in educational institutions, both from a legal and Church perspective. In the Church setup, they answer to Superiors, Provincials, and Bishops, while legally, they are the heads of the institution. This dual role can sometimes be challenging to navigate. This article aims to clarify their distinct roles and responsibilities and highlight the positive impact they can have during their tenure. Note that “Principal” includes “Headmistress” or “Headmaster.”
From the Church’s Point of View
From the Church’s perspective, a religious or priest Principal operates under the authority of their Superior, Provincial, or Bishop. They report to and are accountable to these higher authorities, seeking approval when necessary. The Principal works in coordination with other community officials like the Superior, Minister, Administrator, and Treasurer. Major decisions are made in consultation with the Superior. In essence, the Principal represents the interests of the Congregation/Diocese, the registered society, and the community, rather than pursuing a personal or autocratic agenda. Their approach is one of entrusted responsibility, emphasizing collective responsibility for the institution by the entire Congregation/Diocese, registered society, and community.

Fr Alex G SJ

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When we think of financial administration of a registered society, we don’t mean just administering finance; rather it is much wider than the finance; it includes the organizational structure, officials and their roles, Governing Body, financial policy, monitoring, audit, reporting, record keeping, etc. Here is an attempt to understand the role of each of these in financial administration.

1. Organizational set-up: We run all our institutions and activities under the umbrella of a registered society. This is to say that all our institutions and activities are run as units of the registered society. Thus, the registered society is the owner of all these institutions and activities and that one income tax return is filed consolidating the accounts of all units. The return is filed in the name of the registered society, using the society’s PAN. If so, the income and expenditure of all units is the income and expenditure of the society and the society may use the income of all its units for any of its units, but in line with its objectives. Till last year, we were free to give donations to any registered society with similar objectives and with 12A within the Province or Diocese and the entire amount donated could be taken as application of income for the income tax purpose and treated tax exempt. But no more. From April 2023, only 85% of the donated amount could be taken as application of income, making the balance 15% as accumulation under section 11(2) or as taxable income. As a way out of this problem, we can re-organize our organizational set-up of each society. We can regroup our institutions and activities under each society in such a way that each society has financially well to-do and dependent institutions too, so that we can claim 100% utilization (application of income) for the entire amount spent on any unit within the society’s structure. Besides, where possible, we can take the purchase bills of the revenue expenditure directly in the name of the society which wants to support its sister organizations under another registered society.

Fr Alex G SJ

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